Museum pays $19m to settle case over painting stolen by Nazi agent

A 12-year dispute has ended with an agreement that a 1912 oil painting will be returned to a Vienna museum and displayed with an acknowledgement that it was stolen from a Jewish art dealer by a Nazi agent.

'Portrait of Wally' by Austrian expressionist Egon Schiele

7:00AM BST 21 Jul 2010

The settlement calls for the Leopold Museum to own the painting entitled "Portrait of Wally" by Austrian expressionist Egon Schiele after paying $19 million (£12m) to the estate of Lea Bondi Jaray and allowing it to be displayed for three weeks at the Museum of Jewish Heritage in lower Manhattan.

The painting has been the subject of court proceedings in New York City since it was lent 12 years ago to the Museum of Modern Art in New York by the Leopold Museum. At least three times, a judge had ordered it returned to Austria without acknowledgement it had been stolen.

Lawyer Preet Bharara said in a statement that the settlement among the US government, Jaray's estate and the Leopold Museum "marks another small step toward justice for victims of property crimes during WWII."

The deal comes less than a year after US District Judge Loretta A. Preska rejected the Leopold Museum's argument that the painting was not stolen property and days before she was to preside over a trial to decide whether the museum knew it was stolen property when it was brought into the United States in September 1997.

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In January 1998, the Manhattan district attorney's office began investigating claims that the painting was stolen more than a half century earlier when Jaray was forced to sell it on the cheap to a Nazi art collector.

After a state judge refused to let prosecutors seize the painting and an appeals court upheld the ruling, federal prosecutors obtained a federal seizure warrant from a magistrate judge, blocking its return.

The painting was among more than 100 paintings lent to MOMA by the Leopold Foundation for a three-month exhibit that ended Jan. 4, 1998. At the time, it was estimated that "Portrait of Wally" was worth about $2 million.

The Leopold Museum has always insisted that it acquired the painting in good faith from legitimate postwar owners.

Henry Bondi of New Jersey filed the claim that said the painting had been taken from his late aunt, a Viennese Jew, as she fled her home in 1939 to go to London when Germany annexed Austria. She died in 1969. Henry Bondi also has since died.